Aten v feet Vine Holde

Aten v feet Vine Holde - [1937] HCA 6 - HCA 1937 case summary — Zoe

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his intention, it is well established that he retains the benefit of it ' against the inheritance. Although he has not declared his intention of keeping it alive, it is presumed that his intention was to keep it alive, because it is manifestly for his benefit" (See Adams v. Angell (1), per Jessel M.R.). The Master of the Rolls adds that it

would be a most extraordinary hypothesis to suppose that a person paying the money due under a first mortgage should have intended to make a second mortgagee into a first mortgagee without any explicit arrangement to that effect, thus possibly making a sub- stantial present to the second mortgagee (2). These considerations ' appear to me to apply to this case. It would be an extraordinary hypothesis to suppose that Phillips intended, by spending £782 10s.
in purchasing the mortgage from Robert Jones, to extinguish that | mortgage and to promote the second mortgagee into the position of a first mortgagee. This view is confirmed by the fact that Phillips dealt with the mortgage as a subsisting interest in the land, -and that he sold it to R. R. Jones, obviously treating it as an existing _ security. Thus, in my opinion, although the covenant by Phillips to pay the principal and interest has necessarily disappeared, the mortgage still exists as a security over and a charge upon the land, and the present holder of the mortgage, the plaintiff bank, has a full right to exercise all the remedies against the land which are given to it by the Act. _ It may be added that under sec. 97 Brown, the present proprietor _ of the land, is bound, so long as he remains transferee of the land, by an implied covenant with "the mortgagee " in the following _ terms: That he, the transferee, will pay the principal, interest and other moneys secured by the mortgage, after the rate and at _ the time or times specified thereon. Sec. 3 of the Act provides _ that the description of any person as mortgagee shall be deemed to extend to and include the assigns of such person. Thus the Plaintiff bank is entitled to the benefit of the implied covenant mentioned, and can therefore recover the mortgage debt from _ Brown, as transferee of the land, as well as exercise in respect of _ the land the remedies already mentioned.

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Sec. 97 also provides for an implied covenant to pay (or indem against payment of) the mortgage debt by the transferee of gaged land (such as Brown) with the transferor (such as his imn predecessor Daly), and by each transferee in turn with his transfi and so ultimately by Phillips' transferee with Phillips. Phi did not transfer the mortgaged land to R. R. Jones, nor did R, Jones transfer the mortgaged land to the bank. Thus this part of sec. 97 has no direct bearing upon the question under consideration, But it is said that this provision gives some support to the v that Phillips is still personally liable on the covenant to pay, be it provides for working out the liabilities of the persons conce on a just basis. It is said that if Phillips pays the mortgage deb to the bank, he can recover upon the covenant of indemnity his transferee, and each transferor along the line can eventually recover it from his transferee, so that ultimately the debt will recoverable from Brown. This would be the case if the debt y recoverable from and were recovered from Phillips, but sec. 97 h no bearing upon the question whether Phillips is still liable upor the covenant to pay contained in the mortgage. It leaves untouch the argument based upon the fundamental rule that a man canno be a debtor to himself. It has been argued that when Phi transferred this mortgage to R. R. Jones he, in effect, redeliv the mortgage as a deed so that all its provisions again became effectual, and reference is made to In re Seymour; Fielding v Seymour (1) and to sec. 57 of the Act, which provides that a instrument when registered shall have the effect of and be dee and taken to be a deed duly executed by the parties who hav signed it. Cases such as /n re Seymour (1) relate to a deed, ori invalid, being subsequently acknowledged and recognized as deed of the grantor. Apart from the subsequent circumstant relied upon as constituting a redelivery, the document in que: r. would have had no effect at all. The present case is very differe There is no question of redelivery or re-execution of an i document. A new document, a transfer of the mortgage, definitely executed by Phillips and registered, and the only que which arises is as to the effect of that transaction. In my 9}

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principal, interest and other moneys secured by such mortgage or encumbrance after the rate and at the time specified therein, and will indemnify and keep harmless the transferor from and against such principal, interest and other moneys, and from and against all liability in respect of any of the covenants contained in such mortgage or encumbrance, or by the Act implied, on the part of the transferor (sec. 97). Again, a mortgage or encumbrance under the Act does not operate as a transfer of the land, but has effect as a security (sec. 132). Upon the production of any duplicate mortgage or encumbrance, together with a memorandum signed by the mort- _ gagee or encumbrancee discharging the land or any part thereof from the whole or part of the moneys secured, the Registrar-General shall make an entry in the register book and on the mortgage or encum- brance, noting that such mortgage or encumbrance is discharged wholly or partially, or that part of the land is wholly or partially dis- _ charged, as the case may require, and upon such entry being so made in the register book, the land or the said part thereof shall cease to be subject to or liable for the said moneys noted in such entry as discharged, as the case may be (sec. 143). A registered mortgage or encumbrance may be transferred to any person in the form allowed by the Act (sec. 150). Upon such transfer being registered, the estate or interest of the transferor as set forth in the instrument transferred, with all rights, powers and privileges thereto belonging _ or appertaining, including the right to sue upon and recover in his own name any debt, sum of money, annuity or damages under such _ transferred instrument, shall pass to the transferee, and such trans- feree shall, while he remains the registered proprietor of such estate or interest, be subject to and liable for all and every the same Tequirements and liabilities to which he would have been subject _ and liable if named in the transferred instrument originally as mortgagee or encumbrancee (sec. 151). The Act, it may be observed, is not a code, and land subject to its provisions is " subject to the same general law as land not under it," except where otherwise _ Provided by it. '" The general tendency of the courts in construing the Act" is "to assimilate rights and liabilities under it to those __ existing under the general law, and to alter previous law as little as

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possible " (Groongal Pastoral Co. Ltd. v. Falkiner (1) ; Guest, Tra of Land Act, pp. 3 and 215). There are decisions of the Su Court of Victoria, under a section which is not precisely in the sa terms as sec. 97, that the transfer of mortgaged property does create a direct liability between the transferee and the moi though the transferee is liable to indemnify the mortgagor (Aus Deposit and Mortgage Bank v. Lord (2); Hall v. Hubbard (3 But it should be observed that sec. 97 in the South Australian. provides that the covenant shall be implied, " and so long as transferee shall remain the registered proprietor, with the mortg and encumbrancee." It is unnecessary, however, in the p case, to consider the precise obligation thrown by sec. 97 of the upon the transferee of land subject to a mortgage, for the p liability of the original mortgagor arising on the covenants of th mortgage remains unimpaired, notwithstanding the fact has conveyed the land to a purchaser: in other words, though he had transferred the land, remained liable to Robert on his covenant in the mortgage to him for the principal sum th secured and interest thereon. But he paid these moneys to J and thereby discharged the obligation of his covenant in the n gage. He might have required and registered a memorandum 0 the discharge of the mortgage, pursuant to sec. 143. He t however, a transfer of the mortgage to himself. He could no himself sue himself on the covenant to pay, and further, his payme to Jones had discharged, so far as he was concerned, the obligati of that covenant ; though the person to whom he had tran the land was bound to indemnify him, But I do not think # the security was also discharged, whatever the position might been under the general law. There was no merger, for Phi the time of the transfer of the mortgage to him, was not the proprietor of the land, nor had he any estate or interest Further, the Act itself allows the transfer of a registered m to any person (sec. 150), and prescribes how a security is to discharged (sec. 143). Phillips might have taken a transfer of t mortgage in the name of a nominee to preserve the security, in 4

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payment of the amount demanded by the mortgagee not as discharg- ing the mortgage, but as consideration for its transfer to him. The money cannot be now regarded as paid in satisfaction of the mortgage debt. But, when the transfer of the mortgage to the defendant was registered, the statutory vesting of the obligation in the obligor might work an extinguishment of the covenant, if such extinguish- ment were consistent with the purposes of the statute. It was suggested, on the other hand, that the covenant might be merely suspended. The foundation for this suggestion must lie in the statute. Under the principles of the common law an attempt to suspend an obligation resulted in its discharge. "It is a very old and well established principle of law, that the right to bring a personal action, once existing and by act of the party suspended for ever so short a time, is extinguished and discharged, and can never revive" (per Parke B., Ford v. Beech (1) ). But, apart from statute, the benefit of a covenant would not vest at law in the _ obligor, at any rate in the same right. The question which calls for decision arises out of the operation of the statutory provisions, and although the legal result ensuing from the situation created by those provisions must be determined by the principles of the general law where the expression of legislative intention stops short, it is neces- _ sary, before resorting to them, to obtain a complete understanding of the statute and exhaust the implications it contains. Under the system of registration governing the present case, the _ statutory charge described as a mortgage is a distinct interest. It _ involves no ownership of the land the subject of the security. Like _ a lease, it is a separate interest in land which may be dealt with _ apart altogether from the fee simple or other estate or interest mortgaged. But, like a lease, it involves, or usually includes, _ personal obligations. It is impossible to treat the personal obliga- _ tions in the same way entirely as the interest in land is treated by _ the registration system. The register cannot be made the source _ of information as to the fulfilment or performance of such obligations, pane the question what rights they continue to confer may depend _ upon such matters, Thus, although a proposing transferee of a mortgage may rely upon the register for the existence and validity

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of the mortgage, he may be unable to depend upon anything b inquiries from the parties to ascertain how much of the pri sum secured remains unpaid (Cp. Nioa v. Bell (1) ). But, nev less, the plan of the legislation is to enable the proprietor to by registration not only the interest in the land, but all the panying personal obligations normally incident thereto, "T statute is concerned with dealings in land and it is becaus mortgage involves such a dealing that the statute prescribes mortgages may be transferred and with what consequences, concerned with the mortgage transaction in its entirety as it a the land, and, therefore, extends to the personal liability of the gagor for the mortgage debt because that liability is int connected with the rights of property arising out of the mo transaction " (Consolidated Trust Co. Ltd. v. Naylor (2) ). In relation to the present case, the most important consi arising in this plan is the failure to limit the persons who may in the interest created by a mortgage or a lease. The langua conferring the power of transfer by registered instrument is univ "A registered mortgage lease or encumbrance may be tra to any person " (sec. 150 of the Real Property Act 1886). The registered proprietor of the fee simple may take a transfer that interest. He may do so although he is the very person wl created it, and therefore the person who is the covenantor. he is capable of taking a transfer and becoming a registered prop he is in that character capable in his turn of making a transi The question whether registered interests may without any in the register be extinguished by merger in estates in land the system is not necessarily involved in the decision of this ap But the subject is connected with the considerations upon ¥ the survival of the covenant depends. For our part we are u to find anything in the legislation to support the idea that the proprietor of the estate in fee simple becomes registered prop! of a mortgage or encumbrance subsisting over the land it is ip facto sunk and merged in the estate in the land of which is already registered proprietor. Machinery is provided for discharge of mortgages (secs. 143, 144). None is provided showing on the register the destruction of the mortgage by met When a mortgage comes into the same proprietorship as the simple a discharge may be executed by the proprietor in h (1) (1901) 7 ALR. 145, at p. 146. (2) (1936) 55 C.L.R. 423, at p. 4

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"eapacities and registered. But otherwise the presence on the register ofa mortgage is conclusive that the registered proprietor thereof may transfer it free from all encumbrances or matters of defeasance, with certain well-known specified exceptions none of which includes destruction of the interest by merger. A mortgage under the system is the creature of statute and its incidents depend upon the provisions of the statute and so much of the general law as is availed of by or under those provisions. Destruction by merger does not appear to us to be a part of the general law which the provision relating to registered mortgages should be understood as invoking. 'The person proposing to deal with such an interest is not expected

to satisfy himself that neither the present registered proprietor nor any person preceding him was not proprietor of the estate encumbered. or of the reversion. Although what authority there is cannot be _ said to be uniform, we think the weight of opinion is against the _ view that the transfer of a registered mortgage or encumbrance to
the registered proprietor of the estate encumbered destroys the mortgage or encumbrance (See Kerr, Australian Lands Titles _ (Torrens) System (1927), pp. 29 and 251 and notes ; Stevenson v. Byrne (1) ). In the argument of that case counsel said : " There is nothing _ in the Act which enables a man to be both mortgagor and mort- _ gage." Holroyd J. answered: "It does not say that he shall not be, and if the circumstances lead to a man coming into that position _ legally, why should you introduce a doctrine of merger to prevent 'him having his rights." But cp. In re Victorian Farmers Loan and Agency Co. Ltd. (2), decided earlier in the same year and leaving _ the question open. Recently Maughan A.J. decided that a term of _ Years registered under the system, but in land the title to which _ otherwise had not been brought under the system, might be extin- _ guished by merger in the reversion (Lewis v. Keene (3)). The _ Special problem raised by the circumstance that the reversion was 'tae under the Act does not, of course, arise in the present case.
But neither does the question how leases may be affected by merger. " term of years is an interest existing apart from the provisions of 'the statute and its qualities are defined by the general law, subject _ however to the statute. The system does not make the determina-
tion of the term dependent, in all cases, on registration, and it is _ possible that its determination by merger remains allowable. Upon

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It appears to us that the plan of the legislation is to treat mortg as distinct and persisting interests capable of the same ready tran by registration as estates in fee simple and without any discriminati or concern as to the relation of the transferee or transferor to any other estate or interest in land. Such a legislative p we think, inconsistent with the application of general doctri law under which the final extinguishment of obligations results fr the benefit of the obligation coming to reside in the obligor, must, of course, be true that where the person under a liabilit another acquires the other's correlative right he cannot thus or come under a liability to himself. But the legislature is m obliged to respect theories of jurisprudence and, when it proce deal with obligations on the analogy of property, it is not to do so. When sec. 151 of the Real Property Act 1886 that upon registration of a transfer of a mortgage, lease or encun brance, the estate or interest of the transferor, as set forth int instrument transferred, with all rights, powers and privileges th belonging, including the right to sue upon and recover in his 01 name any debt, sum of money, annuity or damages under transferred instrument, shall pass to the transferee, it means, think, that they shall pass and be enjoyed as a congeries of sep and distinct rights which in turn may be alienated by him by m of a registered transfer. Thus, we think that in accordance with general intent of the statutory provisions, a mortgagor who acquire the mortgage by subsequent transfer may himself transfer it in tum just as if he were a stranger to the original transaction by which 1 came into existence. When he does so the transferee takes it in same way as if there never had been a coincidence of the oblig and benefit of the covenant in the same person. Where the tral feror not only is the original mortgagor, but also remains the reg tered proprietor of the estate mortgaged, and is therefore primar liable, this view may result in difficulties in ascertaining the which should be regarded as unpaid on the mortgage. Th difficulties do not arise where, as in the present case, the mort, at the time of transfer is secondarily liable. But it may be that while the mortgagor who is solely liable may be con! d keeping down interest, he cannot be treated as having paid « principal. For he himself has transferred the mortgage as and

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